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Alan Greenspan has died

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Re: Alan Greenspan has died

#191

Post by [deleted] »

throw0101d wrote: post #15
bhouston wrote: post #5

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world: https://ritholtz.com/2008/11/gold-and-economic-freedom-by-al... The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these…

> He wrote about how the gold standard created responsible spending and more equality in the world: The Gilded Age, which had quite high levels of inequality, occurred when the gold standard was active: * https://en.wikipedia.org/wiki/Gilded_Age It should also be noted that the gold standard did not bring any kind of price stability: * https://archive.is/https://www.theatlantic.com/business/arch... Further, sticking…

[deleted]

Re: Alan Greenspan has died

#193

Post by notahacker »

somenameforme wrote: post #177
throw0101d wrote: post #127

Earlier quoted context omitted.

> Gold Standard is probably a force that acts against inequality […] Is there evidence for this? During the Gold Standard era there were many periods of deflation, which is bad for people with debt: back in the day this was often farmers, nowadays it'd be anyone with student loans or a mortgage.

Two points I'd hit on: 1) Deflation causes debt to become more expensive. Inflation causes your money to become worth less. There's a simple solution to debt becoming more expensive, but no practical solution to you getting a pay-cut every year, especially when a sizable chunk of people don't even realize they're getting a pay-cut and don't want to be unthankful for a "raise." That issue alone already causally explai…

> 1) Deflation causes debt to become more expensive. Inflation causes your money to become worth less. There's a simple solution to debt becoming more expensive, but no practical solution to you getting a pay-cut every year, especially when a sizable chunk of people don't even realize they're getting a pay-cut and don't want to be unthankful for a "raise." That issue alone already causally explains much of the rise in inequality. Cut people's wages in a stable or deflationary system and there will be hell to pay. Cut them in an inflationary system and they say thank you.

You don't cut people's wages in a deflationary system, you just cut people.

That's true even in the short term, but if the deflation is expected to be sustained, you might as well cut all of them, because if you turn all your assets into hard currency your purchasing power increases every year, whereas if you take the risk of actually hiring people to make stuff during a period of sustained deflation then it might not and on average you have to get them to make more stuff for less money simply to maintain the amount of money you started off with...

There is a simple solution to debt being expensive, but that simple solution involves paying wealthier people a greater proportion of their income to have somewhere to live. Remarkable how people can act like this is favourable to workers and yet pay rises (an inflationary phenomenon!) are bad for them....

Re: Alan Greenspan has died

#194

Post by spwa4 »

throw0101d wrote: post #99
Noaidi wrote: post #95

Earlier quoted context omitted.

Have you lived through the late 90s big tech boom or the current AI boom?

> Have you lived through the late 90s big tech boom or the current AI boom? Inequality (at least in the US) started growing in the 1980s, after Reagan got elected. For causes I'd start with these: * https://en.wikipedia.org/wiki/Friedman_doctrine * https://en.wikipedia.org/wiki/Reaganomics

What people often forget is what preceded the Friedman Doctrine. Management would simply directly use company resources for their own personal benefit. This went from employing their entire family (and in the 1970's that did not mean 1 nephew, it meant 50 of them), to Free VIP access to Disneyworld, all-inclusive.

https://en.wikipedia.org/wiki/Club_33

Frankly, my grandfather is dead now, but I did have one or two conversations with him about how equal society was before the Friedman doctrine, and, certainly for the first 30 years or so it was definitely more equal, not less.

Which isn't to say that now the Friedman doctrine is causing a problem too. I just don't think the solution lies in turning it back. Economic arguments are so shallow these days. Even early communists pointed out that some functions in society will have unequal access to resources. This is not something that can be prevented while maintaining the use that that has. The means of production have a purpose and confiscating and redistributing them will do nothing but cause a disaster. It very much will not get everyone an iPhone and an apartment. And, the part communists forgot (and "forgot" in many cases) is that confiscating them simply creates a new upper class, it doesn't solve the class difference.

Re: Alan Greenspan has died

#195

Post by wolpoli »

bko wrote: post #39
bhouston wrote: post #5

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world: https://ritholtz.com/2008/11/gold-and-economic-freedom-by-al... The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these…

I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightly growing by nature) account of measure. Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technol…

Recall that real interest rate = interest rate - expected inflation. The goal of the central banker is to keep real interest rate low. If you have negative expected inflation, that sets a lower bound on the real interest rate since interest rate could only go as low as zero. This gives less flexibility for monetary policy to handle crisis and that scares the central bankers.

Re: Alan Greenspan has died

#196

Post by sokoloff »

conductr wrote: post #66
byronic wrote: post #50

Earlier quoted context omitted.

TLDR - Why make it harder for people to get help on the basis that some people might get help who don't deserve it? means testing kills the usefulness of these kinds of stimuli. I completely disagree with your point here and the people buying Gucci/LV are a drop in the bucket compared to, say, Wal-Mart's yearly wage theft statistics. There is no simple means of identifying who is in need and if people get the help wh…

There’s no need to make it difficult. All you have to do is publish sensible guardrails and force people to apply for assistance and it would shrink the public cost substantially. I have homeowners insurance, but if my home burns down today I won’t have any reasonable assistance deposited this week. There’s a claim process and I need to have an emergency fund to get my immediate needs met. Everyone should care. The n…

Give it to anyone in an identifiable way. Tax it back from the people you don’t want to be able to keep it.

In a lot of cases, getting the money out there quickly matters a lot and taxing it back 1-3 years later is fine.

> if my home burns down today I won’t have any reasonable assistance deposited this week

It’s Monday. I’d wager that if I had that type of loss on a Monday, that I’d have $10K or so in my account from my insurance before Saturday.

Re: Alan Greenspan has died

#197

Post by twothreeone »

wonnage wrote: post #176
throw0101d wrote: post #15

Earlier quoted context omitted.

> He wrote about how the gold standard created responsible spending and more equality in the world: The Gilded Age, which had quite high levels of inequality, occurred when the gold standard was active: * https://en.wikipedia.org/wiki/Gilded_Age It should also be noted that the gold standard did not bring any kind of price stability: * https://archive.is/https://www.theatlantic.com/business/arch... Further, sticking…

There is an idea floating around that trade imbalances create global inequality (Trade Wars are Class Wars by Klein & Pettis) and the original sin was adopting the dollar as the reserve currency instead of something like Bancor ( https://en.wikipedia.org/wiki/Bancor )

Interesting, thanks for the pointer! Though, since we're dealing in hypotheticals already: wouldn't the expectation be that whoever gained the upper hand on the world stage would've aimed for de-facto control over whichever currency system was in place anyways?

Re: Alan Greenspan has died

#198

Post by nostrademons »

bhouston wrote: post #11
b40d-48b2-979e wrote: post #10

Earlier quoted context omitted.

And when production for a system I built burns down the month after I leave my job, the next guy they hire was actually the culprit! Greenspan was seen as responsible for the dot-com bust as well which was solidly in the center of his tenure.

I think that this was relatively not known as a major risk far in advance otherwise more traders would have gotten rich. Michael Burry only started to short the market in late 2005, four months before Greenspan's term ended. It is hard to ask Greenspan to have super natural powers of foresight beyond just about everyone else.

Warren Buffett described derivatives as "financial weapons of mass destruction" in Berkshire's 2002 letter.

Re: Alan Greenspan has died

#199

Post by bluegatty »

bhouston wrote: post #5

I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world: https://ritholtz.com/2008/11/gold-and-economic-freedom-by-al... The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these…

It's impossible to talk about the supposed benefit of the Gold Standard without saying that it's a completely arbitrary constraint.

Basing currency on a shiny rock is the stupidest idea ever, that only happens to work because it plays into the worst of human convictions, which is egosim around fraud and debasement of currency.

Gold Standards are like very strong medicine with bad effects.

Notably, they would almost assuredly hold back the economy and cause deflationary traps.

The economy needs a bit more currency as it expands and that's that.

Re: Alan Greenspan has died

#200

Post by bluegatty »

throw0101d wrote: post #127
4er_transform wrote: post #98

Earlier quoted context omitted.

Gold Standard is probably a force that acts against inequality but the forces pushing inequality today are just much stronger. Technology that creates winner take all markets and incredible leverage with few people being one.

> Gold Standard is probably a force that acts against inequality […] Is there evidence for this? During the Gold Standard era there were many periods of deflation, which is bad for people with debt: back in the day this was often farmers, nowadays it'd be anyone with student loans or a mortgage.

"Gold Standard era there were many periods of deflation" - yes but that's not so much about inequality.

I think there's a lot merit to Gold is a bit better for equality - but it probably holds us all back in the aggregate.

Elon Musk could not be a Trillionaire in the highly speculative cash-flush situation we have today.

The 2008 crash and the current boom are happening only because of alot of extrea money in the system, and it's going to one group, not the others.

The 2008 bailout was to the 'open secret upper class' aka home owners.

If we 'let the cards fall' in 2008 the banking system would have crashed but it's home prices that would have crashed harder.

A 'stricture monetary system' would have forced people to pay the price. Though it would have had devastating consequences as well - it's possible that with stricter lending, the 2008 crisis would have never happened.

FED sets rates that generally favour the GDP, the growth of which is mostly captured by people with more equity. The more loose money for equity etc the more likely it is to be concentraed.

This is all 100% solvable.

There is no ideological debate needed.

A 'relatively strict' Fed, with rules that favour consumer surplus and that is not fully oriented around equities or some 'outside cause' - that's really truly like 'Gold but with some expansion' ... aka a very small-c conservative approach would be a solution that should be acceptable by pretty much everyone except for the MMT people.

I think it would bode better for 'equality' because money means something known, and large enterprise, financiers can't leverage their influence and scale into making it mean something more for them.

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